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194Q TDS ON PURCHASE OF GOODS

Tara Khandelwal (Student CA Final ) (293 Points)

14 July 2021

Hello everyone

1) I have a query related to deduction of 194Q. Whether it has to be deducted on taxable value or invoice value inclusive of GST & Freight. Also some charge Freight along with goods purchased and GST is charged only on goods and not on freight.

What would be the Purchase value on which TDS @ 0.1%

2) Whether TDS under 194Q is deductible on Monthly electricity bill paid in excess of Rs.50 lacs ?

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6 Replies

CMA Poornima Madhava (CMA) (13097 Points)
Replied 14 July 2021

1) Tax to be deducted at source u/s 194Q on value excluding GST provided the GST portion is separately disclosed on the invoice. As I understand, TDS would apply even on freight charges.

2) As per CBIC circular, transactions in electricity is not covered under section 194Q. Though am not sure whether all such transactions are covered under this exception.

1 Like

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 14 July 2021

Tax is to be charged on exclusive of GST.

I think not applicable on electricity bill u/s 194Q

1 Like

Balamurali Unnithan MS (STUDENT) (1631 Points)
Replied 14 July 2021

As per the earlier clarification from department.
194 Q Apllucable to the taxable value.

KSEB -Govt.Undertaking -Presently on exemption list.

1 Like

Vasudevan C P (403 Points)
Replied 15 July 2021

Tax to deducted on payment without GST portion

1 Like

Susmita Dutta, CA , CPA (CA ) (2141 Points)
Replied 15 July 2021

If the freight is included in the total invoice value then TDS u/s 194 Q is Applicable and if a separate freight and the incidental charges invoice is raised then excluded.

This section is not applicable to: transactions in electricity, renewable energy certificates and energy saving certificates traded through power exchanges registered in accordance with Regulation 21 of the CERCc

1 Like

Ajit kumar Jha (Article assistant) (23 Points)
Replied 25 November 2022

As the section uses the word "goods" (Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees.

so no TDS under this section shall be deducted on service amount.

Thanks & Regards

Ajit Jha